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It has been discovered that goods with a cost of $6 million, which had been correctly included in the count of the inventory at 31 March, 2010, had been invoiced in April 2010 to customers at a gross profit of 25% on sales, but included in the revenue (and receivables) of the year ended 31 March, 2010. What adjustment is necessary (if any) to correct the above situation?
inventory decrease by 6,000
Cost of sales increase by 6,000
because the goods have been invoiced; i am confused sir.
Because the question specifically states “which had been correctly included in the count of the inventory at 31 March, 2010”
The fault is in invoicing, not in the stock count so the correction is to reduce receivables and reduce revenue